AMM Comment: Some visions of the future are clouded by caution

With the fourth quarter fast approaching and the presidential election looming ever closer, the view of where metal markets are heading seems no clearer than it was six months or even a year ago.

Although many in the metals sector remain upbeat in general, on specific points there is still concern: When will the construction sector pick up? What is the overall future of shale gas development? Where are taxes and regulations going?

AMM conducted a survey in the spring on behalf of PricewaterhouseCoopers among global steel and aluminum executives, a repeat of those in April last year and again in October. We take a look at the meaning of the survey numbers starting on page 14, but here are a few quick conclusions:

 Executives are getting glummer. In April 2011, 94 percent of executives were very or somewhat optimistic about the next 12 months; this year, that number fell to 71 percent. This is still a strong number, but it shows concerns.

 Despite regular news about smaller deals and a return to the occasional megadeal, only 17 percent of survey respondents are aggressive in their approach to mergers and acquisitions. This number has been essentially steady throughout the past year.

 A majority of executives see emerging marketssuch as Brazil, Russia, India and Chinaas a path to expansion in the next year. In last years survey, less than half felt that way.

 Greenhouse gas regulation continues to have little impact on business. This may be due to the fact that national legislative efforts have slowed greatly.

 Information technology strategies are still an important aspect of the metals business. (We will explore this further in the October issue of the magazine.) In fact, 86 percent of survey respondents said it is very critical or somewhat important to their operations, up slightly over last year.

Cautious is the word that best seems to describe executives current thinking. The future looks like it will be brighterafter all, business is better than it was just three or four years agoand yet there remains a nagging concern that something isnt quite right. Perhaps the decisions that metal executives make in the coming months will help sharpen those visions.

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